[MUSIC] Many of the most useful rules and procedures in business are given as formulas. Formulas are equations showing how one number is found from other numbers. Let us use one of the most important formulas in business so that it will be easy for us to understand what we are talking about. The formula we are going to use is the one for simple interest. Interest = Principle x Rate x Time. Usually, we use letters as variables for the words in the formula. Normally the letters used are the first letter in each word of the formula. For example, Interest = Principal X Rate X Time becomes I equal to P times R times T. For example, use the formula I = PRT to find I. If P is equal to $4000 R is equal to 0.05 and t is equal to 2. First of all we need to substitute 4000 dollar for p, 0.05 for r and two for t. Notice that writing P, R and T together as PRT indicates the product of different letters. P times R times T. By substituting the numbers in place of the letters, we get I= $4000 times 0.05 times two which is equal to $200. Now let's see another example And we use I equal to pRT to find p. I = $5000, R = 0.06, and T = 3. Then we have I = P RT, and then we have 5000 = P times 0.06 times 3. First we multiply by P, and we get 5000 = 0.18P. Secondly, we need to find P by using the operation which is the inverse of the multiplication. Thus, we have 5000 divided by 0.18 equal to 0.18P divided by 0.18 Then P is almost equal to 28,000. Sometimes we need to manipulate formulas in order to solve for a particular variable. For example, solve for T in the formula M = P(1 + RT). The formula gives the maturity value M in an initial amount of money P invested at the specific rate R. In a certain period of time, T. Then M=P(1+RT), we start by applying the distributive property on the right hand side. And then we get M = P plus PRT. Now, we need to get rid of P on the right-hand side, and therefore we subtract P from both sides. M- P is equal to P + PRT- P And we get M-P=PRT. Now we need to divide each side by PR and then we have M-P/PR = PRT Divided by PR, and the solution is T = M- P over PR. [MUSIC]